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TELECOM & INTERNET | Staff Reporter, Singapore

Published: 21 Feb 16

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Life has just become much harder for Singapore’s three telcos

It will be easier for a fourth telco to enter the market.

The Info-Communications Development Authority's (IDA) latest announcement of its spectrum-allocation framework will result in a more conducive environment for the entry of a fourth mobile network operator (MNO) in Singapore and intensify competition in the telecommunications sector further, according to Fitch Ratings.

The IDA has lowered the reserve price of the total 60MHz spectrum set aside for a new MNO to $35m from $40m. It has also doubled the allocation of spectrum in the 2.3GHz band to 40MHz.

Fitch said that the latest composition of spectrum - consisting of 2x10MHz in 900MHz and 40MHz in 2.3GHz - will enable the new entrant to have a good mix of spectrum for wide coverage and capacity for 4G services.

“This will enable it to compete more effectively on a level playing field with incumbents Singtel, Starhub and M1. We see the new entrant benefitting from the larger allocation of the coveted 900MHz, compared with the 2x5MHz set aside for each of the incumbent,” Fitch said.

Despite reduced costs, high prices will remain a challenge for a fourth operator, the report noted. Fitch said that until 2018, any new entrant is likely to utilise incumbents' networks to offer nationwide coverage.

As the IDA does not regulate wholesale pricing on mobile services, Fitch warned that the new entrant will have few cost advantages during the initial period to pass down to consumers to build its competitive position.

“We expect a large cash burn for the MNO, limiting its ability to compete aggressively in terms of pricing in the next two years,” Fitch said.

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